The fallout from the COVID-19 pandemic and the war in the Ukraine continue to wreak havoc on supply chains in the motor industry, and prestige car insurance claimants, particularly those with European vehicles, are experiencing the full impact of these delays.

Andy Martindale, chief executive of Steadfast Claims Solutions and Steve Toppercov, head of claims operations at Steadfast Claims Solutions explain what the issues are, what’s causing them and how brokers can help their clients best navigate the current environment.

A scarcity of parts delays repair times

Factory shutdowns in Europe (and elsewhere around the world) were a key feature of the COVID-19 pandemic and the production of motor vehicle parts still hasn’t recovered, Steve Toppercov says.

The situation has been exacerbated by the war in Ukraine, where many European car manufacturers have factories, which have either been forced to shut down or are experiencing production, import and export difficulties due to the conflict.

The situation has been magnified by delays in the shipping industry leading to a lag time on parts reaching Australia, and claims that were once quick and easy to resolve, such as a windscreen replacement on a luxury vehicle, are now subject to significant delays.

“This delay means the insured is left in a hire car, or depending on the terms of their policy, may have no vehicle to replace the vehicle being repaired”, Steve says. “We’re trying to expedite the process, but the assessors and the repairers have got their hands tied due to these delays.”

New vehicles taking years to arrive 

Beyond the impacts in Europe, Steve cites the continuing COVID-19 lockdowns and factory shutdowns in China as causing significant delays in the supply of new vehicles. He says the majority of aluminium car bodies are made in China, and the lockdowns are having a ripple effect on the automotive industry and the manufacture of new cars.

The shortage of new vehicles is particularly affecting insurance claimants who have cover that includes new for old replacement of the damaged vehicle.

“They're typically entitled to get the same make, model and series of these vehicles, but by the time they arrive from production, they’re already two years old,” Steve says. “The alternative is to take a cash settlement, whether its agreed value or market value and trying to source a vehicle that's probably second-hand, which is not returning them back to the same position they were in prior to their car sustaining damage.”

Labour constraints also biting

Steve says a shortage of claims assessors is impacting assessment times. There is also a shortage of motor repairers, leading some repairers to reduce the amount of work they take in, favouring larger jobs over smaller ones.

In some cases, repairers are also trying to fix parts rather than replace them, which may help to avoid some of the supply chain delays but comes with a higher labour cost.

Agreed value leaving insureds out of pocket 

With prices for used cars soaring, as demand rises in the absence of new vehicles, Steve says insureds who have insured their vehicles on the basis of an agreed value may be losing out.

“The client knows what they will be paid in the event of a total loss, but the agreed value isn’t equivalent to the market value so they can’t buy the same vehicle on the market for the money they have received,” he says. “As a result, we're starting to see a bit of a trend that people are moving from agreed value back to market value.”

As for what the future may hold, Andy says the industry is heading towards a “new normal”, where clients are prepared to accept longer wait times for both repairs and new cars.

“I think it’ll probably take another couple of years to settle down, because of the lag in production. While it will eventually settle and is heading towards a new normal, I don’t think it will get back to where it was,” Andy concludes.

First class insurance with Dawes 

At Dawes, we understand the realities of owning prestige or classic cars. Visit our website or call us on 1300 188 299 to learn more about our first-class insurance for first class vehicles.

Dawes Underwriting Australia Pty Ltd t/as Dawes Motor Insurance (ABN 18 050 289 506, AR No. 342982) (Dawes) is an Authorised Representative of SGUAS Pty Limited (ABN 15 096 726 895, AFSL 234437) (SGUAS) and acts for the insurer, Allianz Australia Insurance Limited (ABN 15 000 122 850, AFSL 234708) (Allianz). Consider the relevant Product Disclosure Statement and Target Market Determination available by contacting Dawes on 1300 188 288 or visiting www.dawes.com.au, before deciding if it is right for you. Steadfast Claims Solutions Pty Ltd (ABN 44 649 484 364, AFSL 530839) t/as Dawes Claims Solutions performs claims management and settlement services as agent for the insurer, Allianz Australia Insurance Limited.